Going from Employee to Freelance - who did it?


#1

Hello everybody!

I see that there are quite many software developers here and I’d like to know if any of you has already gone freelance/contractor. Has anyone such an experience to share?

I am considering this option myself but so far it is relatively new and fuzzy in my head so I am trying to find out what I will have to pay from my gross revenue:

  • First pillar : here I guess I would have to pay the equivalent to (employee contribution + employer contribution), so around 13%, right?
  • second pillar : i will have to contribute for the maximum mandatory insured salary (84’600 - insured first pillar = 59’925). Since i am in my mid thirties, I expect the contribution rate to be around 7%, so 7% * 59’925 = CHF 4194 per year.
    Zürich taxes: i would expect the income tax rate to be around 18%.

Am i missing something else?

Ah, another question: have you created your own company to deal with your clients or have you used the services of a payroll (“umbrella”) company? Why? if you’ve chosen an umbrella company, what is usually their share cut from your revenues?

Thanks all!


#2

I switched to freelancing, because it offers much higher earnings. I do not have a company though. You could say that the company I “work for” is an umbrella company, but it’s a bit more than that. The boss helps me find projects and they negotiate the rate in my name. They take care of all the contracts and taxes and on paper I have a normal employment contract, but end of year comes a big “bonus”, which covers the difference between what I was already paid out and what I actually billed. The boss takes only 10%, and it’s definitely not all profit for them, as they need to do all the accounting etc. Boss is sure that if I had my own firm, I would pay much more than 10%.

Also, the clients do not like to sign actual freelancers (one person companies), because according to the law they are responsible to see that all the contributions for their external contractors are paid, or sth like that. So with a few external partners it’s easier than with hundreds of freelancers.


#3

I’d love to know how to become Freelance as well, not for the taxes part though. I’m more interested in how to find clients :slight_smile:


#4

I’m considering that as well, but first I need to learn German to be able to do the paperwork. There are three reasons for me - first I’d like to have more off time and it seems that breaks between contracts would be best for that, second I’d like to get the higher salary rate and third I’d like to optimize taxation.


#5

@Bojack : Thanks for sharing your experience! It is interesting to see how you setup your business :slight_smile:
Would you mind to share, out of your daily billing, approximately which proportion goes into your pocket after social contributions and taxes? (a rough back-of-the-envelope estimate is more than enough…)

I am not afraid about finding my first client (I work in a very niche industry), but finding many clients would be more difficult given the side of my market. So before making a jump, i just want to make sure the revenue leap is in line with what I expect :smiley:


#6

So just as an estimate:

  • 10% goes to the boss
  • 7% goes to 2nd pillar
  • 8% goes to AHV
  • 15% goes to income tax
  • 10% are benefits and tax deductions (business lunch, abo, phone, laptop)
  • 50% is net salary

So I guess in total around 2/3 of the billed amount stays with me and 1/3 is gone.


#7

Thanks for the cost breakdown! It is much clearer to me now…